NEW YORK—Gannett Co., the nation’s largest newspaper publisher, said Friday that its third-quarter profits fell 32 percent as it saw less advertising revenue than last year as part of broader cutbacks in a worsening economy.

The results are largely in line with Wall Street expectations after adjusting for severance costs from major job reductions.

The company’s net income was $158 million, or 69 cents a share, on revenue of $1.64 billion. A year ago, net income was $234 million, or $1.01 per share.

Revenue was higher than the $1.61 billion analysts predicted but 9 percent below last year. Excluding severance costs, Gannett would have earned 76 cents a share, a penny above what analysts polled by Thomson Reuters expected.

As a bellwether, the publisher of USA Today isn’t immune from the revenue pressures on the industry. The migration of readers and advertisers started years ago. The weak economy compounded problems for newspapers as retailers, employers and real estate agents spend less on promotions and other advertising.

Earlier in the week, The McClatchy Co., The New York Times Co. and Journal Communications Inc. reported third-quarter earnings that beat Wall Street expectations after adjusting for one-time charges. But those companies also reported sharp declines in advertising; all but the Times saw September worse than August.

Gannett owns The Coloradoan in Fort Collins and KUSA and KTVD in Denver.

Advertising revenue at Gannett’s publishing business fell 17.7 percent during the quarter compared with the same period last year. Classified revenue for real estate tumbled 41.5 percent, while the company saw a 34 percent reduction in sales for help wanted ads. Ad revenue at USA Today fell 7.1 percent.

Circulation was down 3.3 percent, contributing to an overall 14.4 percent revenue drop in the publishing business. Gannett could see gains in circulation revenue later this year as newsstand prices for USA Today, the nation’s top-selling paper, rises 25 cents to $1 on Dec. 8.

Demand for political advertising helped offset some of the losses at Gannett, particularly in its broadcast division, which saw a 3.9 percent increase in revenue. Gannett’s NBC television stations also got a boost from ads during the Olympics.

During a conference call, Gannett said total online revenue for the company, including the newspaper Web sites and newly acquired Internet-only properties, grew 7 percent on an adjusted basis. However, Gannett’s local papers saw a 7 percent drop in online revenue, largely because of weakness in classified advertising.

Because of monthly fluctuations in the digital businesses, Gannett said it was suspending its closely watched monthly revenue reports, prompting complaints from some analysts during the call. The reports had been showing accelerated declines in ad revenue, though the company insists bad news isn’t the reason behind the decision.

As previously disclosed, the credit crunch prompted Gannett to draw down an additional $1.2 billion from its existing credit agreements on Sept. 30, bringing the total to about $1.9 billion. The company said it was trying to reduce dependency on short-term loans called commercial paper, which became more difficult to obtain.

Gracia C. Martore, the company’s chief financial officer, said Gannett had about $203 million in commercial paper outstanding, with funds available to pay those off later this year. Debt of $4.1 billion should reduce to $3.8 billion by year’s end.

Despite the debt level, the company is stronger than many of its peers because it did not recently make major acquisitions of newspapers, only to find their values plummet rapidly over the last year or two.

Gannett announced cuts of some 1,100 jobs across its local newspapers in August and September as it looks for cost savings to offset the revenue decline. The McLean, Va.-based company took an after-tax charge of $14.4 million during the quarter for expected severance payments.

The company also said it reduced newsprint costs by 3.4 percent by using less in light of a 15.9 percent increase in prices.

For the first nine months of 2008, Gannett lost $1.9 billion, or $8.49 a share, largely on an accounting writedown for the declining value of its newspapers. In the year-ago period, it earned $810 million, or $3.46 a share. Revenue dropped 9.2 percent to $5.03 billion.

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